The Public Transport Council (PTC) yesterday announced a change to the fare formula to include a Network Capacity Factor, which looks at the expansion of public transport capacity against commuter demand. The current indexes of inflation, wages and energy used in the formula were adjusted in weighting. The Straits Times speaks to experts and the PTC to explain the changes.
1. WHY THE NEED FOR THE NEW COMPONENT?
The PTC said that annual operating costs increased by more than $900 million between 2012 and 2016, while fare revenue increased by only $230 million.
The formula has to reflect this to ensure the long-term sustainability of public transport, it added.
Transport economist Walter Theseira explained that having a high quality public transport system and having more frequent trains and buses - as requested for by commuters - results in not all services running at full capacity.
"The new NCF measures the extent to which we are adding capacity beyond actual demand, which translates to more comfortable rides and convenient connections," said the senior lecturer from the Singapore University of Social Sciences (SUSS).
SUSS transport researcher Park Byung Joon noted that since the Government started taking over assets in 2012, the service levels for buses and trains have increased "far higher than what the fare revenue can afford".
2. WILL FARES GO UP?
While the PTC declined to say yesterday if the new NCF component would lead to a fare hike, experts said it was likely.
Dr Park said that with the addition of buses and MRT lines in recent years, it is likely that fares will go up, even though there is a fare reduction of 3.2 per cent carried over from last year's fare exercise.
Dr Theseira said he believes that the NCF will put an upward pressure on fares.
3. WHY ARE RELIABILITY STANDARDS NOT FACTORED INTO THE FORMULA?
The PTC said reliability was left out as an index because this is governed by the operating licence and regulatory framework which the Government imposes on operators.
Dr Theseira agreed, saying that improving reliability requires putting more money into the system, and the reality is that taxpayers will have to foot more of the bill if commuters do not.
5. WHY WERE OTHER COMPONENTS IN THE FORMULA ADJUSTED?
The PTC said that the weightings of the inflation index and energy index were changed to reflect accurately what contributes to operators' costs. For example, with lower oil prices, energy now accounts for a smaller proportion of operators' costs.
Dr Theseira said the adjustments were unlikely to have a huge impact on commuters, as these were very incremental changes.